Installed (not used) or Purchased Licenses. Which One Does a Customer Owe You $ For?

While most customers may say they only want to pay for software eula licenses they use (not all installed), a recent reported case involving the Los Angeles County Sheriff’s Office says they need to pay for what is installed (even if they are never used). Without going into a lot of detail, the court ruled that LA County Sheriff’s Office must pay the software vendor for the licenses installed (in the amount of $210,000), even if they were not used. Plus, the court awarded the software vendor more than twice the damages award in attorney’s fees and costs (nearly $560,000).

Q: So what is the right way to use a case like this?

A: This is a great case to educate your customers about, if they are installing a lot of your software and saying they don’t have to pay for those copies as they are not being used. I am not saying hit them over the head with this case or rub their noses in it, but educating them on your perspective is a huge part of software negotiations.

The goal here is not to go to court, but to me if a customer’s license ends, then the customer should return or destroy all copies of the software (just as the license agreement states). In addition, well run IT departments should not leave unlicensed copies of software on computers (even if they are not using them). Any software company should educate itself on these type of issues, and try to avoid going to court with a customer (if possible, of course).